Escondido continuing strong financial rebound

ESCONDIDO  Sharply surging sales tax revenue has allowed Escondido to restore many unpopular cuts made during the economic downturn and still have large budget surpluses, city officials said this week.

Escondido posted a $4.1 million surplus during the fiscal year that ended in June, and the city expects to post an $800,000 surplus during this fiscal year, finance chief Gil Rojas told the City Council on Wednesday.

Those surpluses come after four consecutive years of large budget deficits, during which the city burned through about $30 million in reserves, laid off dozens of employees and closed a library branch.

Rojas said the projected surplus for this fiscal year would be much higher if the city hadn’t spent millions restoring programs and services in recent months.

Since last summer, the city has spent $850,000 hiring additional fire personnel, $500,000 for grants to help businesses spruce up their appearance and $100,000 to host the nation’s biggest bike race this May.

In addition, many city employees got raises this winter so that Escondido City Hall could reopen on Fridays after four years of being open only four days per week. Rojas didn’t estimate how much those raises cost.

City Manager Clay Phillips said last week that he plans to spend much of the additional revenue on paving streets and aggressive code enforcement to crack down on graffiti and illegal garage conversions.

And the council approved spending $50,000 Wednesday to install surveillance cameras throughout Grape Day Park as part of a comprehensive effort to rid the downtown park of crime.

Later this month, the council is scheduled to begin debating the proposed budget for the fiscal year that begins July 1, Rojas said.

Councilwoman Olga Diaz, who was elected in fall 2008 during the height of the economic downturn, said it was a welcome change to see city finances flush for the first time since she took office.

Rojas said he was projecting a large surplus despite lower-than-expected revenues from property taxes, hotel taxes, permits, interest income and fines collected by the Police Department.

Rojas said vehicle sales have been particularly crucial to the financial recovery of the city, which has 20 new car dealers and nearly as many used car lots.

Last fall, sales tax from new cars was up 27.4 percent and sales tax from used cars was up 33.9 percent, compared with fall 2011.

Rojas said the city is projected to collect $32 million in sales tax this year, nearly as much as before the 2007 recession.

The economic downturn hit the city particularly hard because the auto dealers make Escondido more reliant than most other cities on sales tax, which tends to fluctuate with the economy more than property taxes and other revenue.

But city finances have come back strong, partly because of some new businesses that produce significant sales tax. They include an elaborate Lexus dealership, a CarMax used car lot and a three-story Target at Westfield North County mall.